NBN wholesale agreement rejected by ACCC

Australia's competition watchdog has ordered the company running the National Broadband Network (NBN) to go back to the drawing board and redesign its pricing structure.

In rejecting the NBN Co's plans on how to charge clients and consumers to access its networks, the Australian Competition and Consumer Commission (ACCC) also indicated that it has concerns about the company's monopoly powers.

The structure of the NBN means internet providers pay for the service from NBN Co and then on-sell it to consumers.

NBN Co has been seeking approval from the ACCC for that wholesale pricing system to operate until 2040.

The ACCC says it is happy with much of the proposal, including a cap on prices.

If someone has got the market power that comes with being a monopoly, you'd expect they'll take advantage of it. That's why we need to be there as the regulator to make sure that doesn't lead to an excessive use of that market power.

But in a draft decision, the regulator said its preliminary view was that it was not satisfied the Special Access Undertaking (SAU) met the relevant criteria for acceptance and has suggested variations.

The competition watchdog is aiming to ensure users would get services of similar quality at a similar price to what they pay today.

It says it wants to periodically review pricing to ensure it remains fair.

Chairman Rod Sims says he is concerned new products could be used to price gouge.

"We need to be there to look at withdrawal and introduction of new products and their pricing to make sure that nothing can undermine that price cap regime," he said.

Mr Sims said the SAU was a complex undertaking.

"It is therefore important the rights or obligations the SAU imposes on NBN Co, access seekers and the ACCC are reasonable," he said.

The ACCC says it expects the next step it would take is to issue a notice to formally vary the SAU.

People can make submissions about the ACCC's decision until May 2.

NBN Co has released a statement saying it will examine the ACCC's suggestions.

The Federal Opposition says the ACCC decision reflects its concerns about overcharging for NBN services.

Opposition communication spokesman Malcolm Turnbull says the ACCC shares his concerns that a blowout in the cost of building the NBN will be pushed onto consumers.

"What the ACCC is saying is 'well, hang on, if you guys overinvest, as we're concerned that you're going to do, that means you'll be able to charge more and more'," he said.

"This is the point, which of course is the criticism we've been making.

"We've been saying 'hang on, there is a direct connect between overinvesting in the NBN and affordability'."